You will compare an SSB, a savings account and a fixed deposit for one real pot of money and pick one with reasons.
Farah now has S$30,000 of savings, and every option looks reasonable. Her bank is promoting a fixed deposit. Her friend swears by SSBs. Her savings account is easy and already set up. Rather than pick the one with the highest number, she sorts it out on one page. This exercise walks you through the same page for your own money. Allow about 25 minutes. All rates below are made up for practice; use current ones from official pages when you do yours.
Choose a single pot of money, not all your savings at once. Good candidates are your emergency fund, money for a planned expense two to five years away, or cash that has been sitting idle with no job at all.
Write down three things about it: the amount, what it is for, and the earliest date you might need some of it. Farah's S$30,000 has two jobs. About S$12,000 is her emergency fund, sized using lesson 3.1 of The Singapore personal finance system, How big your emergency fund should be. The other S$18,000 is for a part-time course she plans to start in about three years.
Different jobs often need different answers, which is why the decision at the end can split one pot into slices.
Draw a table with three columns, one each for a savings account, a fixed deposit and an SSB. Give it four rows: yearly rate, access speed, cost of getting out early, and protection.
Here is Farah's version with made-up figures.
Yearly rate. The savings account pays 0.5% on her balance. A 12-month fixed deposit pays 2.8%. The current SSB has a first-year rate of 2.4% and a three-year average return of 2.6% on the MAS table.
Access speed. The savings account is instant. The fixed deposit is locked for 12 months unless broken. The SSB can be redeemed in any month, with the money arriving early the following month, so allow up to about a month.
Cost of early exit. The savings account has none. Breaking the fixed deposit means losing some or all of the interest, depending on the bank's terms, which lesson 5.3 covers. The SSB has no capital loss, only the higher step-up rates given up and any transaction fee.
Protection. The savings account and the fixed deposit are Singapore dollar deposits, so they fall under SDIC deposit insurance up to the limit per depositor per member, which you check on the SDIC website. The SSB is a Singapore Government obligation. Lesson 1.3 of How money works, What SDIC deposit insurance covers and what it does not, explains the deposit side.
The row people skip is access speed, and it matters most for an emergency fund. An SSB redemption takes weeks, not hours. If Farah's car insurance excess or a medical bill lands on a Friday, an SSB will not pay it on Monday.
So the emergency fund itself usually splits in two. One part stays in a savings account for anything that has to be paid within days. The rest can sit somewhere that pays more but takes a few weeks to reach, since most emergencies give you a little time after the first bill. How much goes in each part depends on your own costs. Farah decides one month of expenses, S$5,000, stays instant, and the other S$7,000 can wait a few weeks.
Turn the rates into dollars for each slice, so the gaps are real.
The instant S$5,000 in savings at 0.5% earns about S$25 a year. Low, but its job is to be there on a Friday.
The other S$7,000 of the emergency fund in the SSB earns 2.4% in the first year, about S$168, and Farah can still reach it within about a month without losing any of it.
For the S$18,000 course fund, compare the fixed deposit and the SSB. At 2.8%, a 12-month deposit earns about S$504 a year, if she can renew at a similar rate. At the SSB's three-year average of 2.6%, the same sum earns about S$468 a year. That is a gap of about S$36 a year in the deposit's favour, before any renewal risk. In return the SSB lets her take out part of the money in any month with no loss, and it keeps its schedule for the full three years instead of resetting each year.
Finish with three sentences: which option holds which slice, and why. Farah writes: "S$5,000 stays in my savings account for bills I must pay within days. S$7,000 of my emergency fund goes into the SSB, because I can wait a few weeks for it and it pays far more than savings. The S$18,000 course fund also goes into the SSB, because S$36 a year is a small price for being able to reach it in any month if my plans change."
Another person with the same numbers could reasonably choose the fixed deposit for the course fund, for example if they were certain of the date and happy to break a deposit only in a true emergency. What matters is that the reason is written down and matches the pot's job.
A finished version has one named pot, a filled three-by-four table with sources and the date you checked each rate, the dollar figures for each slice, and the three sentences. Build yours now for the pot you picked.
Complete the safe money comparison table for one real pot and write a three-sentence decision naming which option holds which part of it.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).